Fat, drunk, and stupid is no way to go through life, son.
A growing capitalist economy, unlike our Monetarist economy, produces deflation. This is normal. This is was not created by Milton Friedman, the father of lies, creator of the "natural 2% inflation rate".
One cannot make a blanket statement that deflation is the normal state of affairs. For instance, under various commodity standards the world experienced century long periods of inflation, followed by decades of deflation. One might assume that under commodity based money that the money supply is fixed, but that assumption is not supported by the historical record, monetary theory, or common sense. Further, it’s in the best interest of financial intermediaries to monetize assets, so even under a fixed based commodity standard the money supply would grow. It is only by the imposition of severe restrictions on the ability of banks to create money that deflation can be a normal state of affairs – but then that isn’t capitalism. Is it? |
